Dear Harry

: My father passed away last year and left his house to my two sisters and me. We agreed that I could purchase my sisters' share, so I applied for a mortgage. The mortgage officer found that there was a record of back city taxes that amounted to about $12,000.

She told this to the title clerk at the title insurance company before settlement.

At the settlement, the title clerk made several phone calls, and concluded that the only taxes due were for the year 2000.

This was paid by the title insurance company from the funds available at settlement. Then, I got a notice from the city that the amount paid was applied to the taxes for 1985. At that same time, I found a notice to my father that there were indeed unpaid taxes due the city from 1985 forward. The title company was notified, but we cannot get them to answer any of our letters or phone calls. They did not respond to the lawyer who handled our father's estate, either. Where do we go from here?

What Harry says: The title clerk made a bad error. Normally, the taxes would have been withheld from the funds available at settlement. That means that each of you would be charged for one-third of the amount due.

If you can get the title insurance company to pay these taxes, they will only come after you for what they pay. It seems to me that the easiest way out is for you and your sisters to pay the taxes that you should have paid at settlement. However, I think the people at the title insurance company should get a whack in the butt for not responding to your calls and letters.

Dear Harry: I recently applied for a mortgage to buy a new home. In the course of the investigation, a delinquent account was found in my credit report. I contacted the collection agency listed in the report, and all I could get from them was that it was a "valid account." They refused to send me any information at all. They offered to "settle" with me if I paid half the amount they are claiming. I couldn't get any further information.

My bank, after many tries, finally got the info. The account did not even have a proper identifying number according to the supposed original creditor, nor could they match the number given to any account in their records. I am sending a copy of the letter I got from my bank regarding this to the three major reporting outfits as well as to the Federal Trade Commission. Regarding the mortgage, my bank says that the seller of the property I'm buying will take care of the payment to the collection agency, and I can straighten things out with the credit report later. I'm not happy about having my report say that I settled with a collection agency. What do you suggest?

What Harry says: The credit reporting agencies could very well get this corrected once they get the letter from the bank and your letter. However, I agree with you that you could have a problem if the account is paid even in part. I also suggest you contact the state Attorney General's Consumer Protection Division at 215-560-4214 in addition to the letters you've written. Your case points out the necessity for each of us to get those three free credit reports, one every four months. Go to annualcreditreports.com, an error like this would have been caught early on when it's easier to resolve.

Dear Harry: Back in 1991, I bought a life insurance policy with payments to age 80. I wanted it to make sure my children would not have to pay for my funeral. When I turned 80, they cut me off. I called them and asked why. I was told that the policy terminated on the anniversary that followed my birthday. Can they keep all the money I paid them? I paid them faithfully for 15 years. What happens to all that money? We need someone like you to fight for us little guys.

What Harry says: What you had was a "term" policy. It was designed to pay your heirs if you should die during the specified years that the policy was in force. Once you passed that period, you no longer were covered. In that regard, it was similar to your homeowner's or auto insurance.

Once the period is over, you're no longer covered, and there's no money coming back to you. Every year stands alone. The money you paid on your policy goes to pay the beneficiaries of those who died. If you bought a "permanent" policy, there would be a cash value on termination before death. But you have to remember that you'd also be paying a higher premium.

Dear Harry: My mother is in a nursing home, and we are in the process of "spending down" her assets until she will qualify for Medicaid. Back in the '70s, I bought a bunch of U.S. Savings Bonds.

The money came directly from my pay in an employer-sponsored plan. However, I listed my mother as co-owner. She never paid for any of the bonds. I have always reported the interest on the bonds that I cashed on my income tax return. Should I try to get her name off the bonds so the Medicaid people won't think they are somehow hers? If so, how do I go about it? If Medicaid asks for proof that I paid for the bonds, what can I do? I don't have pay-stubs that far back, and I doubt that my employer has a record either.

What Harry says: There's no need to get the name removed from the bonds. You have enough evidence of ownership to satisfy any reasonable inquiry. You have physical possession of the bonds, you have your tax returns showing the interest on redemptions, your name is listed first on the bonds, your SS number is the one registered on them, your employer had a bond purchase program.

Dear Harry: In September, I hired a contractor to do over my bathroom with new fixtures and a new tile floor. He came highly recommended by a neighbor (who I later found out was his cousin). I gave him $2,000 as a deposit with the balance to be paid at the time of completion. What a mistake! He came one day ready to work, turned off the water lines, got a call on his cell phone, and left to get a tool he had forgotten. He never came back. I called many times and spoke to his cousin. I turned my water back on and counted myself lucky that he hadn't started to dismantle my bathroom. The trouble is that he seems to have been kidnapped by operators of a UFO.

His place of business is locked tight. His phone is now disconnected. I'm probably out my $2,000, but can I get a tax deduction?

What Harry says: Probably not. Sorry. Theft losses are deductible. However, your loss must first be reduced by $100 and further reduced by 10 percent of your Adjusted Gross Income (AGI). Unless your AGI is less than $19,000, your deduction will be wiped out.

Contractor losses are among the highest losses for consumers. You can never do too much checking for reliability and workmanship.

It's very rarely a good idea to pay any money up front.

It is OK to pay as the project progresses. *

Write Harry Gross c/o the Daily News, Box 7788, Philadelphia, PA 19101. Harry urges all his readers to give blood - contact the American Red Cross at 800-GIVE LIFE.